GBP/USD in correction mode, still above 1.2900

GBP/USD printed a fresh daily low at 1.2910 during the American session. It remains near the lows, practically unchanged amid low market volatility. With Wall Street closed due to Independence Day in the US, price moves area limited. 

The pair is moving in a minor range between 1.2910 and 1.2930, consolidating a modest daily loss. It is the second slide in a row for cable, that continues to retreat after reaching 1-month highs last week at 1.3028. 

The pound rose more than 300 pips last week boosted by a weak US dollar and particularly by the change in the rhetoric of Bank of England Governor Carney, opening the doors to a debate on a rate hike. Today, Saunders, a member of the Monetary Policy Committee mentioned that UK households should prepare for higher rates. 

BoE's Saunders: Prepare for higher interest rates - The Guardian

Levels to watch 

The divergence on expectation between the Fed and the BoE narrowed, adding support to the pound, but not enough to break 2017 highs. The rally so far was capped by the 1.3020/1.3045 area. A break higher would open the doors to and extension of the rally. 

In the short-term, the price is back below the 20-SMA in the 4-hour chart (1.2945) and technical indicators favor an extension of the correction with limited momentum. Support levels are seen at 1.2895 and then 1.2840/45.